A Plan for Energy Independence
Filed under: General News, Lead Story — Michael van der Galien, Editor-in-Chief on July 9, 2008 @ 1:36 pm CEST
The CEO of BP Capital presents a plan for energy independence. 
T. Boone Pickens, CEO of BP Capital, writes for the Wall Street Journal that it’s time for the US to break with foreign oil. The US has become too dependent on the goodwill of other countries, and it’s costing the US too much money each year. Additionally, if the US doesn’t do anything, it will become even more dependent on those countries for their oil. Thus, Pickens presents a plan to ‘escape the grip of foreign oil.’
He starts off his op-ed by explaining the size and scope of the problem. As he writes, the US consumes just about 1/4 of the oil produced in the entire world each and every single year, but it only has 4% of the world’s population. Americans now import 70% of their oil; only a few decades ago, that was 24%. The US will import even more oil in the coming decades if nothing changes.
Foreign oil costs the US $700 billion each year; that’s seven or six times more than what it spends on the War in Iraq annually. Perhaps more shocking is the news that if nothing changes ASAP, the US will ’spend around $10 trillion importing foreign oil’ over the next ten years.
That’s a lot of money.
Now combine the above with the fact that the world only produces 85 millions barrels of oil a day, while the world needs 86 million barrels. This means that there’s a chronic shortage.
And that will only get worse; developing countries will use increasingly more oil, but oil producing countries are unlike to produce more oil. In fact, they are producing less every year.
Now, most of us are aware of the problem, but the question is how can the US deal with it? Pickens:
We’ll start with wind power. Wind is 100% domestic, it is 100% renewable and it is 100% clean. Did you know that the midsection of this country, that stretch of land that starts in West Texas and reaches all the way up to the border with Canada, is called the “Saudi Arabia of the Wind”? It gets that name because we have the greatest wind reserves in the world. In 2008, the Department of Energy issued a study that stated that the U.S. has the capacity to generate 20% of its electricity supply from wind by 2030. I think we can do this or even more, but we must do it quicker.
My plan calls for taking the energy generated by wind and using it to replace a significant percentage of the natural gas that is now being used to fuel our power plants. Today, natural gas accounts for about 22% of our electricity generation in the U.S. We can use new wind capacity to free up the natural gas for use as a transportation fuel. That would displace more than one-third of our foreign oil imports. Natural gas is the only domestic energy of size that can be used to replace oil used for transportation, and it is abundant in the U.S. It is cheap and it is clean. With eight million natural-gas-powered vehicles on the road world-wide, the technology already exists to rapidly build out fleets of trucks, buses and even cars using natural gas as a fuel. Of these eight million vehicles, the U.S. has a paltry 150,000 right now. We can and should do so much more to build our fleet of natural-gas-powered vehicles.
I believe this plan will be the perfect bridge to the future, affording us the time to develop new technologies and a new perspective on our energy use. In addition to the plan I have proposed, I also want to see us explore all avenues and every energy alternative, from more R&D into batteries and fuel cells to development of solar, ethanol and biomass to more conservation. Drilling in the outer continental shelf should be considered as well, as we need to look at all options, recognizing that there is no silver bullet.
The upsides of this plan? No government intervention necessary. No new regulations, no extra taxes.
Of course, the plan as outlined by Pickens will not be suffice, nor will the US ever become completely independent of foreign. However, you can become less dependent on other countries, and you can produce clean energy (which will also be very nice for the environment).
1 Michael Merritt
July 9, 2008 @ 3:38 pm CESTI’m going to cover this in an entry, but I was watching Newt Gingrich on O’Reilly last night, and he was calling for the whole smorgasbord of options for achieving energy independence, and then see which one wins out.
I agree.
2 Tully
July 9, 2008 @ 5:35 pm CESTOf course T. Boone loves wind generation and natural gas–T. Boone has huge investments in wind and natural gas. Doesn’t make it a bad idea, of course. However….
I’m a big fan of wind farms, but the glaring flaw in this particular plan is that wind is a highly variable power source, whereas natural gas is not, and you cannot produce wind on demand. Peak wind generation is generally at night, not afternoon/evening during peak load. You can’t whistle up the wind, or accurately predict the load provided.
As I’ve repeatedly pointed out, there is currently no way for power producers to store excess power generation, nor do we have the grid infrastructure required to push stored energy back into the grid at peak load. Peak is peak, and full capacity means FULL capacity. Picken’s plan has no provision for expanding grid capacity and infrastructure–it’s a straight substitution deal for existing power generation, and by the nature of that substitute would actually make the grid less reliable, particularly during peak load periods.
So it would in theory provide more fuel (natural gas) for vehicles, but only at a cost of making electrical supply less reliable. Nor would that necessarily lower "dollar exports" for imported fuel, as we import about 18-19% of our natural gas consumption NOW. Placing added demand on LPG while reducing oil demand would simply be price-swapping unless we could somehow eliminate the import factor. His plan relies on a lower fuel cost for natural gas than for oil, but prices are fungible.
And to the extent that electricity moves into the transportation market in the form of plug-in hybrids and vehicles, that will be placing added demand on the grid as well.
As I said, there’s some points to consider in Picken’s plan, but it is certainly no panacaea and it ignores some uncomfortable realities. First task for us is to increase grid capacity and infrastructure so as to enable electrical new energy and alt-energy to actually be distributed if and when it’s produced. Second is to diversify transportation energy sources, and once again that means the capacity and infrastructure to distribute them. And third is to generate more portable fuel domestically (oil, LPG, whatever including electricity) to reduce reliance on imports. Gotta do all three or at best we’re just applying Bandaids® and urinating into the prevailing breeze.
3 Polimom
July 9, 2008 @ 11:27 pm CESTTully — I wrote about this at TMV yesterday. Pickens’ plan (according to an article about the public hearing in November in Gray County, includes the following:
In addition to the wind farm, Mesa plans a 750-megawatt coal-fired plant to supply energy when the wind isn’t blowing and a 600-megawatt natural gas-fired plant to handle peak loads.
There’s a clear acknowledgment of (and plan for) wind’s intermittent nature. It’s actually a pretty impressive plan, though I’m not sold on the natural gas-powered transportation aspects.
4 RRRocks
July 10, 2008 @ 4:21 am CESTTrust Barak Obama.
When you visit his site on Obama dot com you get the full run down.
HE will fix everything by 2030. he is in love with the date 2030.
In the meantime we get to watch gasoline become so outrageous that all the automakers die. Millions of autoworkers are out of a job. The travel industry collapses. Trailer sales drop to nothing. Winnebago goes belly up. 100’s of thousands of gas stations go out of business. Mechanics, too many to count are on welfare lines.
I thought we were in Iraq for oil. Damnit. Wheres my oil at???
5 Tully
July 10, 2008 @ 4:23 am CESTT. Boone’s plan is to make T. Boone richer. Preferably with a giant chunk of tax credits and abatements as part of the financing, and a hearty pat on the back for being such a good citizen to boot. T. Boone has ordered wind turbines, but he hasn’t ordered any coal or gas generation. T. Boone’s company owns piles of producing natural gas reserves and gas pipeline capacity in Texas/Louisiana/Oklahoma. T. Boone has also bought up piles up water rights in Texas, and is now well-set (pun) to suck the Ogalalla Aquifer dry…for a price.
Coincidentally, T. Boone got state law changed on his behalf to set up a teeny-weeny duly and legally established official state water district* entirely under his control, one with full state-backed legal powers of bond issue and eminent domain. Coincidentally, T. Boone’s proposed water pipelines would follow the same route as his proposed electrical transmission lines, now allowable thanks to another little change in state law…arranged by T. Boone.
Conclusion: T. Boone wants to corner the utilities markets of Texas–water, gas, and electric. T. Boone is ALL about T. Boone.
Fact–it’s simply not possible to replace 22% of current U.S. power generation with wind power in anything like the time he proposes, and maybe not at all. Current share of wind power in the US is 0.7% of all generation. T. Boone’s windfarm at full claimed capacity would boost that by 20% or so. To actually replace 22% of American electrical production with wind power would require something on the order of 40 times as many wind generators as currently exist, pretty much blanketing the "wind corridor" of the Great Plains–and would still require keeping at least half of the "replaced" gas generation facilities fully operational and ready to roll as backup facilitiess to cover those variability problems.
T. Boone is ALL about T. Boone.
[*–size, eight acres, population, TWO. On Picken’s ranch, and both residents are his employees. The powers of bonding and eminent domain are exercisable throughout the state. And thanks to the Kelo decision, they can be exercised on behalf of private developers–such as T. Boone.]
6 RRRocks
July 10, 2008 @ 5:04 am CESTIm not opposed to wind power at all. I think its a great idea. Solar panels. Yep go for it.
The problem as I see it is 4 dollar gas and climbing. What are we going to do about it now. Not in 2030 or 2020 or even 2013.
Now. At this rate gasoline is going to be so pricey that it will start shutting down automakers, travel industry, airlines. By election day gasoline will be 5.50 to 6 dollars per gallon. Im betting it gets Obama trounced at the polls and it will be the democratic parties fault and not his.
7 Connor
July 10, 2008 @ 2:22 pm CESTOne thing that others have pointed out…Boone wants to replace gasoline-burning vehicles with natural gas that he’ll save by using wind power.
However, natural gas is much more efficiently used by power plants than by internal combustion engines, so diverting it to power vehicles would be wasteful. It’d be better to use that natural gas to generate electricity to power plug-in hybrid cars. Obviously that would require producing lots of plug-in hybrids, but I’d be more efficient than natural gas powered hybrids.
8 Tully
July 10, 2008 @ 5:13 pm CESTConnor, that still brings back the OTHER problem. Plug-in electric sounds nifty should our battery tech actually make it a really feasible replacement, but you still need the national grid capacity and infrastructure to deliver the electricity. If we all switched to electric cars tomorrow, we wouldn’t be able to charge them. The additional load would be too much for the grid. It would be the equivalent of adding a couple of California’s worth of load to the grid. You can make all the electricity you want, but you still can’t push the grid past peak load, and we’re pretty much at capacity. You need more grid to use more electricity.
And it bears repeating that while T. Boone is claiming using natural gas would reduce our foreign energy dependence, we are importing about 20% of our natural gas NOW. Just changing what it’s used for will not reduce imports–DUH!
Meanwhile we are the Saudi Arabia of coal, that other power-generating fuel that produces fully half of our electricity already, and we have enough coal to last us centuries. As SHOULD be well-known, coal can also be used to make synthetic crude oil at a cost of about $40/barrel.
So why is T. Boone not advocating switching over some of our coal usage to power generation and syncrude conversion, which would actually reduce our combined national oil/natural gas imports through direct substitution?
Well, T. Boone doesn’t have billions of dollars invested in coal production and coal distribution. He does however have billions invested in natural gas and natural gas distribution and a major wind farm.
It’s tough to paint a much clearer picture–T. Boone’s "plan" is to make T. Boone money. As a national plan, it’s a pipe dream.